QUESTCOR PHARMACEUTICALS INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - QUESTCOR PHARMACEUTICALS INC	d580909d8k.htm

August 2013

NASDAQ:

QCOR

NASDAQ:

QCOR

Exhibit 99.1

Safe Harbor Statement

Note: Except for the historical information contained herein, this press release contains forward-looking statements that have been

made pursuant to the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial

performance. In some cases, you can identify forward-looking statements by terminology such as "believes," "continue," "could,"

“ensuring,” "estimates," "expects," "growth," "may," “momentum,” "plans," "potential," "remain," "should," “start,” "substantial,"

“sustainable” or "will" or the negative of such terms and other comparable terminology. These statements are only predictions. Actual

events or results may differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the

following: Our reliance on Acthar for substantially all of our net sales and profits; Reductions in vials used per prescription resulting

from changes in treatment regimens by physicians or patient compliance with physician recommendations; Our ability to receive high

reimbursement levels from third party payers; The complex nature of our manufacturing process and the potential for supply

disruptions or other business disruptions; The lack of patent protection for Acthar and the possible FDA approval and market

introduction of competitive products; Our ability to continue to generate revenue from sales of Acthar to treat on-label indications

associated with NS, MS, IS or rheumatology-related conditions, and our ability to develop other therapeutic uses for Acthar; Research

and development risks, including risks associated with Questcor's work in the area of NS and Lupus and efforts to develop and obtain

FDA approval of Synacthen, our reliance on third-parties to conduct research and development and the ability of research and

development to generate successful results; The results of any pending or future litigation, investigations or claims, including with

respect to the investigation by the United States Attorney’s Office for the Eastern District of Pennsylvania regarding the Company’s

promotional practices and litigation brought by certain shareholders arising from the federal securities laws, currently pending in the

United States District Court for the Central District of California; Our ability to comply with federal and state regulations, including

regulations relating to pharmaceutical sales and marketing practices; Regulatory changes or other policy actions by governmental

authorities and other third parties in connection with U.S. health care reform or efforts to reduce federal and state government

deficits; An increase in the proportion of our Acthar unit sales comprised of Medicaid-eligible patients and government entities; Our

ability to estimate reserves required for Acthar used by government entities and Medicaid-eligible patients and the impact that

unforeseen invoicing of historical Medicaid prescriptions may have upon our results; Our ability to effectively manage our growth,

including the expansion of our sales forces, and our reliance on key personnel; Our ability to integrate the BioVectra business with our

business and to manage, and grow, a contract manufacturing business; Our ability to comply with foreign regulations related to the

operation of BioVectra's business and the international sales of Synacthen; The impact to our business caused by economic conditions;

Our ability to protect our proprietary rights; The risk of product liability lawsuits; Unforeseen business interruptions and security

breaches; Volatility in Questcor's monthly and quarterly Acthar shipments, estimated channel inventory, and end-user demand, as

well as volatility in our stock price; and Other risks discussed in Questcor's annual report on Form 10-K for the year ended December

31, 2012 as filed with the Securities and Exchange Commission, or SEC, on February 27, 2013, and other documents filed with the SEC.

The risk factors and other information contained in these documents should be considered in evaluating Questcor's prospects

and future financial performance.

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

Questcor

Flagship product Acthar has a unique

therapeutic role and sustainable competitive

advantages

Acthar is approved for 19 indications, many

in markets with sizable unmet need

Market penetration remains modest;

sales increasing rapidly

Increasing investment in R&D to create

future value and diversity

Profitable, strong cash flow and balance

sheet; strong commitment to creating

shareholder value

Investment Highlights

Q2-2013 Financial Results

Q2 –

2013

Q2 –

2012

Change

Net Sales ($M)

$184.6

$112.5

64%

Net Sales ($M), Non-GAAP

$196.1

$112.5

74%

Fully Diluted, GAAP EPS

$1.12

$0.65

72%

Fully Diluted, Non-GAAP EPS

$1.35

$0.69

96%

Cash flow from operations ($M)

$81.5

$43.2

89%

Diluted shares outstanding

61.5

64.1

The reconciliation between GAAP and non-GAAP financial

measures is provided at the end of this presentation.

Flagship Product:

•

19 approved indications

•

19 approved indications

Key Therapeutic Areas:

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Rheumatology, Sarcoidosis

•

Significant areas of unmet need; large growth potential

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Rheumatology, Sarcoidosis

•

Significant areas of unmet need; large growth potential

Strategy:

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop

additional

on-label

and

new

indications

•

Expand use to international markets

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop

additional

on-label

and

new

indications

•

Expand use to international markets

*In this presentation, the terms “Nephrotic Syndrome,”

“Multiple Sclerosis Relapse,”

“Infantile Spasms,”

“Rheumatology,”

and

“Sarcoidosis,”

and

their

abbreviations,

refer

on-label

indications

for

Acthar

associated

with

such

conditions.

Investors

should

refer

the

FDA

approved

Acthar

label,

which

can

found

http://www.acthar.com/files/Acthar-PI.pdf

Acthar

Acthar Distribution by Indication

Note: Questcor sells Acthar to a distributor and does not have complete data with

respect to end-use; allocation based on internal estimates (Q2 2013).

Other

Rheumatology

18%

Infantile Spasms

10%

Neurology

30%

Nephrology

40%

Based on Acthar Net Sales

Nephrotic Syndrome (NS)

•

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

•

Caused by a number of underlying types of kidney

disease (e.g., iMN, FSGS, IgA nephropathy)

•

Can result in end-stage renal disease (ESRD), dialysis,

transplant

•

Significant unmet need; few FDA approved options

•

Acthar is indicated to induce a diuresis or a remission

of proteinuria in the nephrotic syndrome without

uremia of the idiopathic type or that due to lupus

erythematosus

•

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

•

Caused by a number of underlying types of kidney

disease (e.g., iMN, FSGS, IgA nephropathy)

•

Can result in end-stage renal disease (ESRD), dialysis,

transplant

•

Significant unmet need; few FDA approved options

•

Acthar is indicated to induce a diuresis or a remission

of proteinuria in the nephrotic syndrome without

uremia of the idiopathic type or that due to lupus

erythematosus

•

A neurodegenerative disease occurring in about

400,000 patients in the US (>100,000 relapses/year)

•

Relapses range from mild to severe and can cause a

range of symptoms

–

Loss of sensation in the extremities

–

Loss of vision

–

Loss of ability to walk

•

Relapses have a measurable and sustained effect on

disability in MS patients

•

A neurodegenerative disease occurring in about

400,000 patients in the US (>100,000 relapses/year)

•

Relapses range from mild to severe and can cause a

range of symptoms

–

Loss of sensation in the extremities

–

Loss of vision

–

Loss of ability to walk

•

Relapses have a measurable and sustained effect on

disability in MS patients

Multiple Sclerosis (MS) Relapse

Lublin et al. Neurology

2003

•

Rheumatology-related indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Rheumatoid arthritis

–

Psoriatic arthritis

•

Each can pose a serious health risk if not adequately

controlled

•

Some cases difficult to manage; Acthar is an FDA-

approved treatment that may be appropriate for select

patients

•

Expanding Rheum sales force from 55 to 62 reps

•

Rheumatology-related indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Rheumatoid arthritis

–

Psoriatic arthritis

•

Each can pose a serious health risk if not adequately

controlled

•

Some cases difficult to manage; Acthar is an FDA-

approved treatment that may be appropriate for select

patients

•

Expanding Rheum sales force from 55 to 62 reps

Rheumatology

*See http://www.acthar.com/files/Acthar-PI.pdf

for specific label information.

Dermatomyositis and Polymyositis (DM/PM)

•

Inflammatory neuromuscular diseases

that cause a loss of muscle strength and

mass

–

Significant quality of life issues; some patients

require walkers or wheelchairs

–

Can also cause significant lung impairment

–

Patients can experience acute exacerbations

(flares)

•

Commonly used DM/PM treatments

•

An estimated 30% of patients may need

an additional treatment alternative*

Alternative

Needed

~20K

* Questcor sponsored market research study (2012)

~70,000 Patients (US)

Prednisone, plaquenil, methotrexate,

azathioprine, IVIG, Rituxan

Adequately

Treated

~50K

Systemic Lupus Erythematosus (Lupus)

•

Chronic autoimmune disorder that can

effect virtually any area of the body

–

Patients can experience acute exacerbations

(flares)

•

Commonly used lupus treatments

•

An estimated 25% of patients may need

an additional treatment alternative*

~250K SLE Patients (US)

* Questcor sponsored market research study (2012)

Adequately

Treated

~50K

Alternative

Needed

~63K

Prednisone, plaquenil, methotrexate,

mycophenolate, azathioprine, Benlysta, Rituxan

Rheumatoid Arthritis (RA)

•

Chronic autoimmune disorder that causes

inflammation of the synovial joints

–

Can be debilitating and lead to join destruction

–

Patients can experience acute exacerbations (flares)

•

Commonly used RA treatments

Prednisone, methotrexate, azathioprine, Remicade,

Humira, Rituxan

•

An estimated 5% of patients may need an

additional treatment alternative*

Alternative

Needed

~65K

* Questcor sponsored market research study, 2012

~1.3 million patients (US)

Adequately

Treated

~1.23M

Psoriatic Arthritis (PsA)

•

Chronic autoimmune disorder manifesting as

both arthritis and psoriasis

–

Patients have both skin and joint manifestations

–

Patient can experience acute exacerbations (flares)

•

Commonly used PsA treatments

•

An estimated 5% of patients may need an

additional treatment alternative*

Alternative

Needed

~45K

* Questcor sponsored market research study, 2012

~900K patients (US)

Prednisone, methotrexate, azathioprine, Remicade,

Humira, Enbrel

Adequately

Treated

~855K

•

Symptomatic sarcoidosis involves inflammation and formation

of nodules in multiple organs, most commonly the lungs

•

Sarcoidosis fits our commercial model

–

Difficult-to-treat autoimmune/inflammatory condition

–

Limited treatment options

•

Previous successes in neurology, nephrology, rheumatology

•

150,000 total sarcoidosis patients

•

Some patients are well controlled but only with high-dose

steroids

•

Symptomatic sarcoidosis involves inflammation and formation

of nodules in multiple organs, most commonly the lungs

•

Sarcoidosis fits our commercial model

–

Difficult-to-treat autoimmune/inflammatory condition

–

Limited treatment options

•

Previous successes in neurology, nephrology, rheumatology

•

150,000 total sarcoidosis patients

•

Some patients are well controlled but only with high-dose

steroids

Sarcoidosis

-Half are symptomatic

-90% of symptomatic have pulmonary issues

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar

often

considered

the

“gold

standard”

and

currently

used

treat

40-50%

patients

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar

often

considered

the

“gold

standard”

and

currently

used

treat

40-50%

patients

Infantile Spasms (IS)

Advancing Our Understanding of the

Science of Acthar and Melanocortin Peptides

•

One of 9 families of hormones produced by the

pituitary, the “master gland”

•

Believed to modulate the immune system and

associated inflammatory response through

binding to melanocortin receptors

•

Activate up to 5 target melanocortin receptors

–

MC1R, MC2R, MC3R, MC4R, and MC5R

–

Differences in chemical structure influence binding affinity

•

ACTH is one of many melanocortin peptides

–

Acthar (ACTH 1-39); Synacthen (ACTH 1-24)

Acthar

Steroid-dependent

anti-inflammatory

effects (indirect)

MC2R

Corticosteroids

Adrenal cortical cells

References available upon request

Steroid-independent anti-inflammatory/immunomodulatory effects

MC1R

MC3R

MC4R

MC5R

Altered

tissue/organ &

cell function

Direct effect

on organ-

specific cells

(eg, CNS,

kidney,

muscle)

Effects on

immune cells

Immune cells, CNS cells, kidney cells, muscle cells,

many other cells

Melanocortin Peptides Activate

Up to Five Melancortin Receptors

Acthar Mechanism of Action

Bomback

al,

Nephrol

2012;36:58–67

2: Gong et al, Kidney International, 83, January 2013

o

Acthar has increased efficacy (>86% vs <30%) vs.

corticosteroids in infantile spasms

o

Acthar has been used with success when steroids

are ineffective in idiopathic nephrotic syndrome

(iMN, FSGS and IgA nephropathy)

Clinical observations:

•

Preclinical observations demonstrate steroid-

independent anti-inflammatory, immuno-modulatory

activity of ACTH & other MC peptides

•

We now believe Acthar and other melanocortins

impact

–

Immune system

–

Inflammation

–

Some cell function

–

Homeostasis

•

Dozens of severe medical conditions may benefit from

Acthar or other melanocortin therapeutics

•

We now believe Acthar and other melanocortins

impact

–

Immune system

–

Inflammation

–

Some cell function

–

Homeostasis

•

Dozens of severe medical conditions may benefit from

Acthar or other melanocortin therapeutics

Implications of Acthar and Other

Melanocortins (Synacthen and new MCs)

•

Have funded or have approved funding for ~70 projects

–

Company sponsored pre-clinical and clinical studies

–

Independent physician sponsored studies

•

Gaining an understanding of the biological properties of Acthar

–

Specific biochemical pathways, cells, and tissues

–

Immunomodulation and anti-inflammatory effects

•

Expanding the body of evidence for on-label indications

•

Exploring possible new indications and targets

–

Autoimmune/inflammatory conditions

•

Initiating development of Synacthen

•

Have funded or have approved funding for ~70 projects

–

Company sponsored pre-clinical and clinical studies

–

Independent physician sponsored studies

•

Gaining an understanding of the biological properties of Acthar

–

Specific biochemical pathways, cells, and tissues

–

Immunomodulation and anti-inflammatory effects

•

Expanding the body of evidence for on-label indications

•

Exploring possible new indications and targets

–

Autoimmune/inflammatory conditions

•

Initiating development of Synacthen

Significantly Increasing Investment in R&D

•

Idiopathic Membranous Nephropathy

–

Phase 4 trial ongoing

–

Refractory, non-responsive, or have relapsed on standard therapies

•

Persistently Active Lupus

–

Phase 4 trial initiated 4Q 2012

–

Daily Acthar administration over a 6-month period

•

Lupus Exacerbations (flares)

–

Prospective investigator initiated

–

Study completed

–

Investigator preparing data publication

•

DM/PM Studies

–

ADAPT Patient Registry currently collecting data

•

Idiopathic Membranous Nephropathy

–

Phase 4 trial ongoing

–

Refractory, non-responsive, or have relapsed on standard therapies

•

Persistently Active Lupus

–

Phase 4 trial initiated 4Q 2012

–

Daily Acthar administration over a 6-month period

•

Lupus Exacerbations (flares)

–

Prospective investigator initiated

–

Study completed

–

Investigator preparing data publication

•

DM/PM Studies

–

ADAPT Patient Registry currently collecting data

Acthar: Ongoing Research in Approved

Indications

Acthar Label Enhancement Strategy

•

Diabetic Nephropathy

–

One of the most common causes of end-stage renal disease in the U.S.

–

Phase 2 IND trial; Approx 40% enrolled

•

Amyotrophic Lateral Sclerosis (ALS)

–

Fatal neurological disease caused by progressive loss of motor neurons

in the brain and spinal cord

•

Inflammatory component to ALS contributes to disease pathology/progression

•

Mean survival time from diagnosis is 3-5 years

•

Affects ~30K people in US and ~30K in Europe; Peak incidence 40-70 years of age

–

Phase 2 IND study patient enrollment underway

–

Orphan Drug Designation granted by FDA

–

Study results to determine whether to pursue ALS as a potential new

Acthar indication

Near Term

Global Growth Strategy

•

Continue to develop knowledge about melanocortin

peptide pharmacology and potential clinical benefits

•

Continue the commercial and scientific development

programs related to on-label Acthar indications

•

Expand commercial effort internationally with

Synacthen

Medium

term

Medium

term

Global Growth Strategy

•

Develop new Acthar indications in the U.S.

•

Develop Synacthen for the U.S.

•

Investigate/pursue Acthar approvals ex U.S.

Longer Term

•

Develop new melanocortin therapeutics

•

Continued stewardship of Acthar

–

Identifying and expanding Acthar therapeutic role in existing and new indications

•

Demonstrated ability to execute

•

Long term investment in R&D --

doubled R&D spending in 2012

•

Highly selective, strategic diversification

•

Have returned $379 million to shareholders through share

repurchases and dividends*

–

22.2 million shares repurchased

–

6.3 million shares remain available for repurchase under share repurchase

program*

•

Quarterly dividend increased to $0.25 per share during Q2-2013

•

Continued stewardship of Acthar

–

Identifying and expanding Acthar therapeutic role in existing and new indications

•

Demonstrated ability to execute

•

Long term investment in R&D --

doubled R&D spending in 2012

•

Highly selective, strategic diversification

•

Have returned $379 million to shareholders through share

repurchases and dividends*

–

22.2 million shares repurchased

–

6.3 million shares remain available for repurchase under share repurchase

program*

•

Quarterly dividend increased to $0.25 per share during Q2-2013

Committed to Creating Long Term Value

for Shareholders

*Data as of 6/30/13

August 2013

NASDAQ:

QCOR

NASDAQ:

QCOR

Reconciliation of Non-GAAP Adjusted

Financial Disclosure

Net income per share –

basic and diluted may

not foot due to rounding.

Use of Non-GAAP Financial Measures

Our

“non-GAAP

adjusted

net

income”

excludes

the

following items from GAAP net income:

1. Share-based compensation expense.

2. Depreciation and amortization expense, including

amortization expense on our purchased intangibles.

3. Interest expense associated with the net present value

adjustment on our contingent consideration.

4. Compensation expense associated with the

BV Trust agreement.

5. Foreign currency transaction loss.

6. Medicaid adjustment for prior

period 2002 -

2009

7. BioVectra purchase price adjustment related to a labor

rebate received in the second quarter 2013

8. Impairment of purchased technology related

to our acquisition of Doral.

Three Months Ended

Six Months Ended

June 30,

2013

2012

2013

2012

Adjusted net income

$83,323

$44,244

$128,987

$84,514

Share-based compensation expense (1)

(4,382)

(2,521)

(8,546)

(4,054)

Depreciation and amortization expense (2)

(1,882)

(218)

(3,131)

(412)

Interest expense associated with contingent consideration (3)

(194)

(391)

Compensation expense associated with BV Trust (4)

(193)

(339)

Foreign currency transaction loss (5)

(328)

Medicaid adjustment for 2002 -

2009 (6)

(7,717)

(7,751)

BioVectra purchase price adjustment (7)

168

169

Impairment of purchased technology (8)

(485)

Net income -

GAAP

$69,123

$41,505

$108,185

$80,048

Adjusted net income per share -

basic

$1.41

$0.72

$2.20

$1.36

Share-based compensation expense (1)

(0.07)

(0.04)

(0.15)

(0.07)

Depreciation and amortization expense (2)

(0.03)

0.00

(0.05)

(0.01)

Interest expense associated with contingent consideration (3)

0.00

—

(0.01)

—

Compensation expense associated with BV Trust (4)

0.00

—

(0.01)

—

Foreign currency transaction loss (5)

—

(0.01)

—

Medicaid adjustment for 2002 -

2009 (6)

(0.13)

—

(0.13)

—

BioVectra purchase price adjustment (7)

0.00

—

0.00

—

Impairment of purchased technology (8)

—

(0.01)

—

Net income per share -

basic

$1.17

$0.68

$1.86

$1.28

Adjusted net income per share -

diluted

$1.35

$0.69

$2.13

$1.29

Share-based compensation expense (1)

(0.07)

(0.04)

(0.14)

(0.06)

Depreciation and amortization expense (2)

(0.03)

0.00

(0.05)

(0.01)

Interest expense associated with contingent consideration (3)

0.00

—

(0.01)

—

Compensation expense associated with BV Trust (4)

0.00

—

(0.01)

—

Foreign currency transaction loss (5)

—

(0.01)

—

Medicaid adjustment for 2002 -

2009 (6)

(0.13)

—

(0.13)

—

BioVectra purchase price adjustment (7)

0.00

—

0.00

—

Impairment of purchased technology (8)

—

(0.01)

—

Net income per share -

diluted

$1.12

$0.65

$1.79

$1.23

Net sales -

Questcor

$177,045

$112,452

$303,817

$208,421

Net sales -

BioVectra

7,528

15,885

Consoldiated net sales

184,573

112,452

319,702

208,421

Medicaid adjustment

11,500

Adjusted consolidated net sales

$196,073

$112,452

$331,202

$208,421

•

Immunomodulation

•

B cell signaling

•

Exocrine secretion

•

Ocular immunity

•

Lipid regulation

Central Nervous System

Exocrine Glands

Lymphocytes

MC5R

•

Regulation of neuroinflammation

•

Cerebral ischemic protection

•

Metabolic control

Podocytes

Renal Mesangial Cells

Endothelial Cells (Glomerular, Tubular)

Central Nervous System

MC4R

•

Protection from ischemia

•

Immunomodulation

Central Nervous System

Macrophages

MC3R

•

Steroidogenesis

Adrenal Cortex, Adipocytes, Testis

MC2R

•

Immunomodulation(including modulation of

antigen presentation; immune cell adhesion and

trafficking; dampen autoimmunity; NF-Kß

sequestration)

•

Cytoprotection (reduction of oxidative stress)

•

Ischemia-reperfusion protection Protection from

LPS-induced systemic inflammatory response

•

Cytoskeletal effects (regulate expression of

collagen, vimentin, podocyte specific proteins)

Podocytes

Renal Mesangial Cells

Endothelial Cells (Glomerular, Tubular,

Vascular)

Macrophages, Monocytes, Neutrophils

Melanocytes

Keratinocytes

Central Nervous System

Chondrocytes

Respiratory tract

GI tract

MC1R

MCR

Tissue/Cell expression

Potential biologic activity

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